The state legislature has passed the foreclosure reform bill, which will require lenders to modify certain mortgage loans and ban foreclosures that do not have proper documentation.

The House passed the measure unanimously Wednesday; the Senate did so Thursday. The bill is expected to be signed by the governor Monday.

Normally, 90 days must pass before a newly passed law goes into effect. But as lenders had feared, the foreclosure bill was passed with an "emergency preamble" causing its measures to go into effect as soon as it leaves the governor’s desk.

That means that any homeowner who receives a notice of foreclosure on or after the date the bill is signed will be entitled to have their loan reviewed and possibly modified under its provisions.

Representatives from the Massachusetts Mortgage Bankers Association (MBA), Massachusetts Bankers Association (MMBA), and the Massachusetts Credit Union League (MCUL) are planning to meet with the Division of Banks next week to determine how their members can best comply with the new law.

"We’re separate organizations with separate membership, but there are times when we do join together and join forces to better serve the mortgage industry, and this is one that we’re all joining in on," said Deborah Sousa, executive director of the MMBA. 

The legislation requires lenders to determine if the net value in of modifying an existing loan is greater than the anticipated recovery from foreclosure. If so, the lender is required to offer a loan modification to the borrower. Not all loans are subject to the modification review process, only those which meet certain criteria.

A provision to institute a mandatory foreclosure mediation process was not included in the final bill, though a committee has been appointed to study the possibility.